Will Baby Boomers Lead to Boost in Worker Woes?

The aging and retirement of the Baby Boomer generation is creating a demographic transformation that will affect the staffs of insurance organizations, as well as their customers.

Consider the following statistics:

• According to the U.S. Census Bureau, by 2030, 19.7 percent of the population, or about 71.5 million Americans will be 65 or older, compared with 12.4 percent in 2000.
• Between 2002 and 2012, the U.S. population over the age of 55 will grow 49 percent, the Urbana/Champaign News-Gazette reported.
• In 1950, there were seven workers for every person over the age of 65. By 2030, there will be three workers for every person over age 65, according to the Committee on Economic Development.
• Sixty-four million Baby Boomers are poised to retire by the end of the decade, according to The Conference Board.
• In a 1998 Gallup survey, 36 percent of respondents planned to wait until age 62 or later to retire. When that survey was duplicated in 2004, the number rose to 57 percent, indicating more plan to work later in life.

Given the trends, there are likely to be labor and skill shortages, a rapid draining of the labor pool, and challenges in recruiting new employees, said Victor Nolan, risk and benefits manager for Clean Water Services.

Nolan, who recently spoke on a panel at the Risk and Insurance Management Society 2008 Annual Conference, noted that older employees may not be ready or able to retire. They may feel obligated to stay in jobs because of their leadership positions, they may want to follow their passion, or they may feel like they can’t afford to retire, he said.

Consequently, “The aging of American people will affect many aspects of our society, from the health care system to financial markets, and has many implications for the U.S. labor market,” Nolan said. “Employers rely on the skills and experience of this skilled labor pool, and as the population ages and more people retire, many industries could face worker and skill shortages.”

Preparing for Older Workers

Based on the trends, Nolan recommended businesses implement succession and retirement planning from the employer and employee perspective, as well as become “employers of choice.” (Learn to become an employer of choice on page 50.) Companies may also want to develop employee skills and knowledge, creating career options.

For example, some older employees may want more flexible schedules or other benefits. Businesses also can provide diversity training to help age groups understand one another, he said.

“Baby Boomers do think differently than the younger generation. That’s a fact,” he said.

Nolan recommended human resources departments track retirement planning from an age and benefits perspective so that they can plan for the hiring process and calculate when some people plan to retire.

Additionally, companies should implement knowledge management, documenting processes throughout the entire organization so valuable information isn’t lost when older employees change positions or retire, he suggested. “What will it take to maintain productivity and service?” Nolan asked. “Will there be other impacts to your organization, such as a decline in the demand for products or services, or new opportunities to plan for?”

If an agency insures retirement homes, demographics could bring opportunities. “Always look for the silver lining,” he said.

Generally, small businesses are more prepared for the aging workforce, according to the National Association of Professional Employer Organizations. In a March 2008 survey, NAPEO indicated that “28 percent of small-business owners have planed for knowledge transfer from experienced older workers approaching retirement age to other workers. In contrast, only one-quarter of large organizations are making any effort to transfer knowledge from soon-to-retire Baby Boomers with just 4 percent having created a formal process to pass on know-how,” Nolan said. “The survey reports that the small businesses have more older workers, with 21 percent saying at least 5 percent of their workers are age 60 to 64, compared to 16 percent last year. Furthermore 37 percent are delaying retirement, and only 4 percent said that some workers would retire before age 65.”

Age Aware

While it’s important for companies to take stock of their workforce, companies also need to be aware of the risks associated with older workers, said Dan Holden, senior risk specialist, corporate risk and finance for Daimler Trucks North America LLC, who also spoke at the RIMS session. Like it or not, the aging process brings with it some undesirable characteristics, he said.

For instance, the aging process is often accompanied by loss of muscle strength, flexibility, hearing and nervous system responses. Older workers tend to tire more quickly and take longer to recover. They also tend to suffer more from chronic illnesses such as diabetes, high blood pressure and arthritis.

“As the body’s metabolic rate slows, that can lead to obesity and an increase in bad cholesterol levels,” Holden said. There also is a decline in mental function, in which multi-tasking becomes more difficult. Many mature workers make unhealthy choices, smoking, consuming alcohol, making poor food choices, being inconsistent with medical visits and refusing to exercise, he said.

Falls are the leading cause of death in adults over the age of 65. Older workers report more back injuries and are more likely to sustain fractures and dislocations from falls. And they are more likely to “push through the pain,” not reporting an injury and continuing to work, which could aggravate an injury, he said.

In contrast, younger workers are injured more often, but they sustain more eye or hand injuries, and report more lacerations and burns. Between ages 19 to 29, the average days lost per injury is less than 11, whereas between ages 50 to 59, the average days lost per injury is 47, according to National Institute for Occupational Health and Safety statistics.

Road to Wellness

Regardless of whether workers are young or old, “the workplace is the perfect place to acquire positive lifestyle change … people spend half of their waking lives there,” Holden said. Employers should “encourage (employees) to embrace change — it’s in their best interest to promote a safer work environment.”

Education is key with older workers, he emphasized. “As workers move from being ‘Superman’ to ‘Prostate man,’ tasks they used to complete easily may become increasingly difficult, yet their pride won’t let them concede defeat,” he said.

He suggested companies encourage all employees to participate in an exercise program to reduce the risk of injury. Other steps to improve worker wellness include providing diagnostic and training programs to prevent specific conditions such as tendonitis; and making ergonomic changes to help with limited mobility, diminishing eyesight, etc.

“By improving employees’ health, companies can reduce on-the-job injuries,” Holden said. That will reflect on the bottom line; the indirect costs of a work-related injury can be two to 17 times the actual cost of the claim, he said.

When calculating the total cost of work-related injuries, employers should factor in: medical and indemnity costs; production downtime; loss of the experienced employee; cost for training a replacement employee; management time to review, resolve and implement changes; the emotional impact/lower employee morale; longer-term physical and emotional impact on the injured worker; and increase in insurance rates, he said.

“Much of the risks associated with mature workers can be applied to everyone,” Holden said. After all, “keeping (a) loyal, experienced workforce has more benefits than drawbacks, if you develop creative solutions to keep them healthy and on the job.”

This article is based on the RIMS 2008 Annual Conference session, “Will You Still Need Me When I’m 64: Managing The Risks of an Aging Workforce.”